What is the super-deduction?
The super-deduction is a temporary capital allowances incentive. It is available to companies (not sole traders and partnerships) which invest in new plant and machinery up to 31 March 2023. Companies can claim:
- 130% super-deduction capital allowances on plant and machinery capital items such as IT equipment, office desks, business tools, vans (not cars), electric vehicle charging point.
Normally, companies can claim corporation tax relief on 100% of the asset cost e.g. asset purchased for £5,000, the tax relief would currently be £950 (£5,000 x 19%).
However, the super-deduction allows tax relief on 130% of the asset value e.g. asset purchased for £5,000, the tax relief up to 31 March 2023 would be £1,235 (£5,000 x 130% = £6,500 x 19%)
As noted above the super-deduction ends on 31 March 2023. Therefore, companies intending on buying new plant and machinery in the near future should consider purchasing this prior to 31 March 2023.
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